Gold price set to hit $2,000 mark

The price of gold has been tipped to surpass the $2,000 mark during 2012.

The rise comes as a result of the global economy’s continued descent and other reports of the US economy struggling. Throughout times of economic unrest gold has proved to be the go-to investment for people scrambling to preserve their wealth. Combine that with its general rarity and it comes as no surprise that gold’s star continues to shine as strongly as the metal itself.

However the increased interest in gold may also come as a bad omen, the World Gold Council has stated that the banks of Kazakhstan, the Philippines, Venezuela, Russia and Saudi Arabia have all recently made purchases of Gold, Saudi Arabia actually increasing their reserves by more than double, from 143m to 323m tonnes. Doomsayers may say that this fervent gold buying shows that the current global currency system is in danger of falling apart, however it may simply be an act of security, as gold has proved throughout history that it is the ultimate safe investment, or in many ways, the ultimate currency.

Fears that inflation could be a result of the financial crisis may also be a reason for the increased gold activity- Jeremy Charlesworth, from Moonraker Commodities said: “If you mass produce something then it will lose value at some stage. Quantitative easing is undermining the value of Western currencies and assets. Yet the European Union has decided that the solution to the debt crisis is even more debt and confidence in the recovery package has now evaporated. When people abandon bonds and Western currencies they will look for real assets, which can't be created at the touch of a button. The gold market really does have the bit between its teeth at the moment.”